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Social Optimum in an OLG Model with Paternalistic Altruism

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  • Marion Davin

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

  • Karine Gente

    ()
    (DEFI - Centre de recherche en développement économique et finance internationale - Faculté des Sciences Economiques - Université de la Méditerranée - Aix-Marseille II)

  • Carine Nourry

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

Abstract

There is no consensus yet on the correct way to write the social utility function in presence of paternalistic altruism. This note shows that the speci cation of the central planner objective is crucial for optimal capital intensity and optimal growth in a one and a two-sector models. In a one-sector model, optimal growth depends on preferences when paternalistic altruism enters the social utility function; otherwise it does only depend on the capital share as in the standard golden rule. In a two-sector model, optimal growth depends on preferences and relative capital intensities when paternalistic altruism enters the social utility function; otherwise it does only depend on the capital share of the investment good sector. Moreover, both in a one and a two sector model, the optimal growth rate tends to be higher when warm-glow altruism enters the social utility function.

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Paper provided by HAL in its series Working Papers with number halshs-00644094.

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Date of creation: 23 Nov 2011
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Handle: RePEc:hal:wpaper:halshs-00644094

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Keywords: Optimal balanced growth path; social welfare function; paternalistic altruism;

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  1. CREMER, Helmuth & PESTIEAU, Pierre, . "Intergenerational transfer of human capital and optimal education policy," CORE Discussion Papers RP -1876, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Michel, P. & Vidal, J.-P., 1999. "Economic Integration and Growth under Intergenerational Financing of Human Capital Formation," G.R.E.Q.A.M. 99a55, Universite Aix-Marseille III.
  3. Philippe Monfort & David de la Croix, 2000. "Education funding and regional convergence," Journal of Population Economics, Springer, vol. 13(3), pages 403-424.
  4. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
  5. Galor, Oded, 1992. "A Two-Sector Overlapping-Generations Model: A Global Characterization of the Dynamical System," Econometrica, Econometric Society, vol. 60(6), pages 1351-86, November.
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Cited by:
  1. Marion Davin & Karine Gente & Carine Nourry, 2013. "Should a Country Invest more in Human or Physical Capital? A Two-Sector Endogenous Growth Approach," Working Papers halshs-00822391, HAL.

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